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Shell restarts Olympus platform after Hurricane Ida damages

Highlights

Olympus restores close to 100,000 b/d of crude

Shell's Mars, Ursa facilities remain down

Shell said Oct. 4 it restarted production from its Olympus platform in the US Gulf of Mexico's Mars corridor after repairing some of the damages to an offshore facility in the aftermath of Hurricane Ida.

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The Olympus restart comes more quickly than anticipated, restoring an estimated 100,000 b/d of crude volumes and leaving only about 70,000 b/d of Shell's Mars production still offline, according to S&P Global Platts Analytics.

Shell has said its remaining shut-in production from the Mars and Ursa facilities likely will not resume flows until early 2022.

The more serious damages caused by Ida were to Shell's West Delta-143 transportation hub in the US, which is a critical chokepoint for moving the medium-sour grade Mars crude. The Mars Pipeline network moved 484,000 b/d in the second quarter.

The tighter supply pushed up Mars and other grades until new suppliers were found.

"Following repairs to portions of our West Delta 143 offshore facility, operated by Shell Pipeline, we have safely and successfully restarted production at our Olympus asset in the Mars corridor," Shell said in a statement. "The remaining assets in that corridor, Mars and Ursa, remain shut in."

After 95% of US Gulf oil and gas production was shut in near the end of August as the Category 4 hurricane made a Louisiana landfall, more than 100,000 b/d is still believed to remain offline more than a month later, including the volumes from Mars and Ursa.

November barrels of Mars crude were offered at a $1.65/b discount to cash WTI on the morning of Oct. 4 and bid at a $1.40/b discount. This compares with an assessed value of a $1.40/b discount to cash WTI on Oct. 1 ahead of the weekend. One trading source said it expected liquidity to be a bit lower for awhile until the issues with the West Delta-143 platform are fully resolved.

US crude imports also have risen in recent weeks after Ida.

The Shell-operated Amberjack Pipeline is fully back online to Port Fourchon and Clovelly, Louisiana, Shell previously said. The pipeline can move comparable medium-sour grades from US Gulf fields, including Chevron platforms and other producers. The return of the Amberjack network has helped restore Mars pricing differentials closer to pre-Ida levels.

Platts Analytics projected that up to 55 million barrels of US Gulf crude production could be lost this year from storms, breaking the recent 2020 Atlantic hurricane season record of 115,000 b/d annualized.

The 2021 Atlantic hurricane season lasts through November, but the busiest months are typically August and September, and there are no active threats near the US Gulf of Mexico, according to the National Hurricane Center.